529 State Tax Benefits
New Mexico Residents
In addition to the federal tax benefits, 100% of contributions to your 529 account with The
Plan are deductible from your New Mexico state taxable income each year. New Mexico is one of
states in the nation to provide an unlimited state tax deduction for contributions to its 529
Education Plan is New Mexico’s official 529 plan. Contributions to other states’ 529 plans are
If you are a New Mexico resident, earnings on your 529 account and withdrawals from it are not
state taxes when used for qualified educational expenses.*
*New Mexico does not permit state tax deductions for
contributions used to pay for K-12 tuition payments
and transfers to an ABLE account. It likely will not allow deductions for contributions used
student loan repayments and apprenticeship programs. The amounts deducted for these purposes
recaptured as state taxable income in subsequent years. Click here for more information.
Non-New Mexico Residents
If you are not a resident of New Mexico, you will still receive the federal tax benefits outlined
Some states have tax benefits for contributions to an out-of-state 529 plan. The map below can
determine your state’s tax benefits and which plan is right for your family. Before investing,
recommend consulting a tax advisor to determine your state’s tax benefits and if it imposes any
limitations on the use of 529 contributions.
Understanding the 529 Tax Landscape State by State
Get the most out of your state tax benefits.
Home of The Education Plan
These states offer tax deductions or credit for contributions to any 529 plan,
*Please Note: State tax benefits in tax parity states apply to contributions in any 529 plan.
These states do not offer tax deductions or credit for 529 contributions, or have no
These states offer tax deductions or credit for contributions to the
in-state 529 plan only.
A contribution to a 529 plan is considered a completed gift from the contributor to the
first $15,000 ($30,000 for a married couple filing jointly) given to each beneficiary each year
excluded from federal gift taxes. (Other gifts given to the same beneficiary must also be taken
account when calculating the total gift in a given year.)
A special provision in the IRS code allows you to use five-year gift tax averaging when
contributing to a
529 plan. This means you can contribute up to $75,000 (or $150,000 for a married couple) to a
account in a single year and choose to have it treated as if you had given it over a five-year
for tax purposes. This can be a helpful way to jump-start a 529 account early on without
federal gift taxes.
We recommend consulting with a tax advisor about gift taxes and your specific situation before
Using Your Tax Refund to Fund Your 529 Account
Reinvesting your annual tax refund into your 529 account is a simple and effective way to grow
account every year. While it can be tempting to spend a refund on a single indulgent purpose,
into a 529 account will put it to work for you over the course of many years and pay dividends a
purchase never will.